Wow, how markets have turned in just a couple of weeks.

Just a month or two ago, popular finance and investing bloggers were commenting about how this market has been one of the least volatile markets in a long time. What a couple of  weeks can do to that theory. From its peak of 3539.95 in mid-April, the STI has fallen (when I first wrote this) to 2843.39 for a fall of 20%. Welcome to the Bear.

The last time we got anywhere close to something like this was in 2011 where the market basically fell throughout the whole year from a high of 3261.35 to 2646.35 for a drop of approximately 20%. Going a little further back (and this is for the new generation of investors), markets fell from an all-time high of 3857.25 in October 2007 and only hit a bottom in March 2009 at 1513.12 for a whopping drop of 60%! Those of us who were around to live through those times would have witnessed a lot of mayhem. What we’re seeing now isn’t anywhere close to ’07-’09.

If your portfolio is anywhere like mine, what you’ll currently seeing is a drop (on paper) equivalent from anywhere between 3-4 months of your salary.

Thing is, during these times, what would you do?

If you can’t sleep easy because you think that your creditors will come knocking on your door, then it’s probably a sign that you aren’t on the right path.

If you are worried that the stocks in your portfolio are going to zero, maybe it’s a sign that you should re-consider your ability (or lack thereof) to pick stocks.

If you’re worried that you won’t be able to retire because of a crash, maybe it’s time you reconsider your portfolio asset allocation.

Food for thought.

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